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Record £3.5 billion exodus from UK retail funds

Staff Writer |
Retail investors removed a massive £3.5bn from UK investment funds in June in the industry's worst ever month for withdrawals as Brexit worries led to many funds suspending redemptions.

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While retail investors redeemed £3.5bn over the course of the month, of which £464m flowed out of ISA accounts, according to Investment Association data, this just represented 0.37% of total UK investment fund assets, which actually grew.

The worst month of retail withdrawals during the financial crisis were the £561m withdrawn in January 2008, while in October 2008 after the Lehman Brothers collapse, retail investors made withdrawals of £493m.

Equity funds accounted for the majority of the outflow, with £2.8m taken out but representing just a 0.51% drop in the ocean, though the outflow from property funds of £1.4bn was a 5.7% decline as investors scrambled for the exits due to concern that the Brexit decision would damage commercial property prices.

Guy Sears, interim CEO of the association, pointed out that the outflow represented just 0.37% of total assets during a period of intense market volatility.

"Clearly, Brexit has been unsettling, with property and equity funds particularly affected following earlier outflows during 2016. At the same time, flows were positive into fixed income and targeted absolute return sectors as investors sought safer harbours."

Fixed income funds have enjoyed the largest growth in funds under management in the six months to the end of June, swelling £13bn.

While total assets under management are now around twice as high as they were in 2008, June 2016 was still an exceptional month for outflows, said analyst Laith Khalaf at Hargreaves Lansdown.


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